US housing market is now worth a record $52 trillion

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House Bill to Create Tax Incentive for Lower-Income Renters link

• A new House bill proposes a tax incentive for landlords to offer affordable rents to lower-income tenants, aiming to address the housing affordability crisis.

• The bill, named the “Affordable Housing Credit Improvement Act of 2023,” seeks to expand and strengthen the Low-Income Housing Tax Credit (LIHTC) program.

• If passed, it could increase affordable housing availability and offer relief to millions facing housing insecurity, especially in high-cost living areas.

US housing market is now worth a record $52 trillion: Zillow link

• The U.S. housing market has rebounded, reaching a record value of $52 trillion after a temporary slowdown from July 2022 to January 2023.

• The market's value surged by over $2.6 trillion in the past year, primarily driven by new construction, with a 1.3% rise in the average value of U.S. homes also contributing.

• Florida dominates the growth with four of its markets, Tampa, Miami, Jacksonville, and Orlando, experiencing the highest value gains since the start of the pandemic, with increases of 88.9%, 86.6%, 82.4%, and 72.3% respectively.

Rise in Office Conversions link

• A surge in office-conversion projects is observed, with approximately 100 expected to complete this year in major U.S. cities, contrasting with an annual average of 41 between 2016 and 2022. Nearly half of these conversions are to multifamily units.

• Cities with older office buildings, like Cleveland and Boston, are leading in conversions, with Cleveland having 11% of its total office inventory under conversion or planned, and Boston having the most total square footage at 6.1 million. These conversions are crucial in cities with high office vacancy rates, above the 18.2% U.S. average.

• Government incentives are playing a pivotal role in facilitating office conversions, especially to residential units, addressing the pressing need for affordable housing and transforming obsolete buildings into vibrant mixed-use centers.

The housing market has hit 'rock bottom' and the sales slump will last a long time - Redfin CEO  link

• The US housing market is experiencing a prolonged sales slowdown, with high mortgage rates and prices impacting affordability for buyers, according to Redfin CEO Glenn Kelman.

• The median sales price for a single-family home is nearing its all-time high, at $420,846 in August, and mortgage rates are persistently above 7%. Existing home sales have dropped to around 4 million a year, a significant decrease from approximately 6.6 million a year in late 2020.

• Kelman predicts that this housing market slump is likely to continue for a "long, long time," as improvements in affordability are not expected until there is a reduction in mortgage rates, which seems improbable in the near future due to the central bank's stringent stance on inflation.

Why Today’s Housing Inventory Shows a Crash Isn’t on the Horizon link

• The housing market of today is fundamentally different from 2008, primarily due to a lack of homes available for sale, preventing a market crash due to oversupply.

• The past 14 years have seen underbuilding, contributing to the current low inventory. Even as construction ramps up, builders are cautious not to create an oversupply, avoiding the mistakes made during the previous housing bubble.

• Stricter lending standards and successful forbearance programs have significantly reduced the number of distressed properties, such as foreclosures and short sales, compared to the 2008 crisis, with four out of every five homeowners exiting forbearance in a stable condition.

Two Midwest Markets Lead the U.S. in Home Price Increases link

• U.S. home prices have been on a rising trend, with a 0.6% increase from June to July, marking the sixth consecutive month of price increases. The S&P CoreLogic Case-Shiller U.S. National Home Price Index recorded a 1% year-over-year increase as of July 2023.

• Midwest markets, particularly Chicago and Cleveland, are leading in home price gains, recording 4.4% and 4% hikes respectively. In contrast, some West region markets like Las Vegas and Phoenix are experiencing significant declines, with -7.2% and -6.6% respectively.

• The overall market scenario is characterized by historically low levels of inventory, with more than half of the tracked markets recording price increases over the past year. The current increase rate is, however, well below the historic peak of 20.8% from March 2022.

Builders only have 76,000 completed new homes for sale link

• Despite expectations, builders have only 76,000 completed units available for sale, struggling to return to pre-COVID-19 levels.

• The housing sector rarely offers many unoccupied new units; even during the housing bubble crash years, builders had under 200,000 completed units for sale.

• Higher mortgage rates are posing challenges for builders, making deal closures increasingly difficult.